NAB purges staff over forex loss
SYDNEY, Australia (CNN) -- Australia's biggest bank, National Australia Bank, has vowed to "weed out cultural misfits" as it reacts to a currency trading scandal that lost it Aust $360 million ($270 million).
The bank sacked four currency options traders Friday, along with the head of its foreign exchange markets division. Three senior managers were also asked to resign.
The bank's former CEO, Frank Cicutto, and chairman Charles Allen both resigned in February when the extent of the breaches became clear.
Cicutto was already under pressure over a failed share-buying raid on insurer and funds manager AMP in August last year, and the bank's losses in 2001-02 stemming from its HomeSide investment in the United States.
The $360 million in trading losses was revealed in January only after whistleblowers told senior management at the bank.
A subsequent report by PricewaterhouseCoopers was highly critical of the bank's systems, finding that the trading losses were the result of "critical weaknesses" in the bank's staffing, risk management and corporate governance.
Ratings agency Standard & Poor's immediately cut the bank's AA credit rating, lowering its long-term rating one notch to AA-.
The PwC report, released Friday, said that since 2001, the four traders had been concealing actual results by using incorrectly recorded trades or false trades.
It said the traders "appear to have been motivated, at least in part, to protect their bonuses". Their bonuses last year ranged from A$120,000 to A$265,000.
New CEO John Stewart said Friday it was "totally unacceptable" for the bank's employees to breach policies and control limits.
"From now on, there will be a zero tolerance policy towards unauthorized limit breaches at the National," he said.
Stewart said he was pleased at the action of the whistleblowers, and the bank would continue to encourage and protect them.
"We need more brave people that are prepared to confront bad behavior," he said.
Shares in National Australia Bank closed Friday down 0.75 percent at A$31.60.
